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+# Project Baru
+
+Library to facilitate DeFi on liquid.
+
+## Loan Protocol
+
+1. The lender and borrower need to agree on the principal, loan_term, collateral of the loan contract.
+2. The borrower sends the lender the LoanRequest with the UTXO's to fund the collateral, collateral amount, borrower_address,
+   borrower_public_key(not associated witht he borrower address).
+3. The lender receives the message and creates the loan transaction:
+   inputs:
+   principal_inputs: coming from the the lender
+   collateral_inputs: coming from the borrower
+   outputs:
+   collateral_output: locked by the collateral output locking script (defined below)
+   principal_output: locked to borrower address
+   borrower_change_output
+   lender_change_output
+   fees.
+4. The loan transaction is unsigned, the lender sends it to the borrower to sign along with some secret values to enable
+   repayment later on (blinding factors)
+5. The borrower verifies (fancy because of confidential transaction) the transaction and signs the collateral inputs.
+6. The borrower send the signed transaction to the lender.
+7. The lender signs the principal inputs.
+8. The lender broadcasts the loan transaction
+
+### Collateral Output Locking Script
+
+```
+if is_repayment {
+    if the tx that is using the collateral output as an input:
+        1. includes and output that pays the principal + interest to the lender
+        2. the sender is the borrower
+        return 1
+    else 
+        return 0
+} else {
+    //liquidation at expiration
+    if the current block number is < loan_term
+        return 0
+    if the sender is not the lender
+        return 0
+    return 1
+}
+```